SIYABULELA MAKUNGA | Clean audit proves commission’s resolve to clean governance

Generally referred to as reports “free of materialistic errors and omissions”, clean audits surely affirm an entity is well governed, transparent and accountable.

Referring to state entities that have been exemplary in consistently obtaining clean audit reports, the erstwhile and the longest servant Auditor-General in the post-apartheid regime, Terrence Mncedisi Nombembe, says: “The one thing all those with clean audits had in common was the commitment of their leadership” to the prerequisites and the notion of a clean audit.

Lauded as “the model of a public servant”, Nombembe says it was easy to identify malfunctioning entities.

“We focused on government institutions that did not adhere to the requirements for clean audits. They did not respond to our findings, there were no consequences for maladministration or neglect of the rules.

“In those cases, our priority was to get the fundamentals right. As long as that was not taken care of, performance audits would not help. Our auditors would find the same poor results over and over again,” he recalled.

He said clean audits were not just another statistical case. Clean audits bolster public confidence in our growing democracy. Nombembe believed that public confidence in the state was “paramount and can only be strengthened if leaders and officials within the public sector carry out their duties legally, effectively, efficiently, economically and, most importantly, in accordance with the set of rules and regulations”.

In the 2023/24 financial year, the Competition Commission continue on its virtuous path to obtain its sixth consecutive clean audit outcome.

The outcome is indicative of the commission’s tenacity to clean governance, transparency and accountability. As one of the most trusted public entities, the commission is not only mandated to contribute to inclusive growth and consumer welfare but also committed to allocating its financial resources in a transparent and responsible manner.

We pride ourselves on utilising public funds appropriately, accounting for every cent in our purse. As we near the release of our annual report for the 2023/2024 financial year, let’s unpack the internal processes and relevant acts the commission follow, and why we are continually improving our internal controls to ensure we maintain a clean audit record.

The commission has demonstrated sound financial management by receiving consecutive clean audits from the Auditor-General. Firstly, the commission is audited by both internal and external auditors. These auditors comb through our financial statements and review our performance areas.

Secondly, during the audit process, documentation and information from previous financial years might also be reviewed. This means we need to track, respond and manage our internal processes throughout the financial year whilst keeping up to date on the legislation that we have to comply with as we receive public funds.

We have a well-established independent committee responsible for strict financial compliance and effective governance practices. This Audit and Risk Committee, including independent non-executive members, diligently oversee the financial reporting process, internal controls, and risk management activities.

This allows for the commission to employ efficient, transparent and robust financial governance throughout, and all employees maintain the highest ethical standards in ensuring that its business is conducted in a manner that in all reasonable circumstances is above reproach.

Our annual financial statements are prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP), issued by the Accounting Standards Board in accordance with Section 91(1) of the Public Finance Management Act (Act 1 of 1999).

This legislation is employed in audit processes for public entities in SA. In addition, the commission needs to ensure it follows the prescripts and regulations issued by the National Treasury, and that provides comprehensive guidelines for the commission on how to apply the required legislation.

The annual financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates. While operating risks cannot be fully eliminated, the commission endeavours to minimise them by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The Auditor-General provided us with a clean audit opinion for the 2023/2024 financial year, signifying that our financial statements are free from material misstatements and compiled per the necessary and applicable legislation. But what are misstatements? Misstatements are incorrect or omitted information in financial statements. A clean audit therefore indicates that our financial statements fairly present the Commission’s financial position at financial year-end and the results of our operations or performance for that financial year.

Our soon-to-be-released annual report for financial year 2023/2024 will provide detailed governance and achievements of the Commission.

To access previous annual reports from the Competition Commission, please go to www.compcom.co.za. These reports are publicly accessible to ensure that the public has access to the necessary information and can keep us accountable for our mission to create an inclusive, growing and deconcentrated economy.

* Makunga is spokesperson for the Competition Commission of SA